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Forex, money bills won't harm economy, assures Sinha; LS nods

The Lok Sabha today passed by a voice vote the Foreign Exchange Management Bill or FEMA and the Prevention of Money Laundering Bill after an assurance by Finance Minister Yashwant Sinha that India would continue to follow a cautious policy on the management of foreign exchange.

The bills were discussed and passed jointly in a two-hour discussion, with Sinha asserting that while FEMA was more liberal and in tune with the country's requirement of liberalisation and globalisation, money laundering was a stringent legislation which would take care of more heinous crimes.

The two bills seek to replace the "draconian" Foreign Exchange Regulation Act.

Sinha said that India's foreign exchange reserves were stable and large and had not been threatened even when the South Asian crisis had been at its peak. The foreign institutional investors had only withdrawn $ 500 million as compared to the foreign exchange reserves of $ 9 billion.

Therefore, liberalisation with the enactment of FEMA was only aimed at making the law humane and practical, and there was no question of any large outflow of foreign exchange on this account.

The minister brushed aside contentions that while some provisions of the bills were clear, others were ambiguous. Therefore, the bills should be gone into greater depth as there was fear of the courts striking down some of the provisions.

The standing committee on finance of the 12th Lok Sabha had gone into the details of the Money Laundering Bill and all details had been looked into. However, the bill could not be passed then because of the dissolution of the Lok Sabha.

On a specific question by Pawan Kumar Bansal of the Congress that legal practitioners could represent an accused, Sinha said this provision had been included along with chartered accountants and company secretaries, as far as the prevention of money laundering bill was concerned.

He said significant changes have taken place with the liberalisation of the economy and in the international money regime.

The bill also seeks to relax the conditions prescribed for grant of bail so that the court may grant bail to persons below 16 years of age, women and sick or infirm people. Provisions have also been made in the procedure for attachment and confiscation of property so as to facilitate the transfer of funds involved in money-laundering kept outside the country, and extradition of accused persons from abroad.

Speaking on the bills, members generally said that there was a need for stringent steps to check the flow of black money. However, Bansal said that there were several loopholes in the bills presented in the house. He said the PML Bill did not cover crimes committed with modern gadgetry like the Internet, which did not require the criminal to be present when the crime was committed.

Similarly, property dealers who were among the biggest defaulters, were not covered. He said the provisions for attachment of property should apply even in the case of those suspected of money laundering and not merely when charged with the crime.

He said there was need to give more teeth to the Appellate Authority by providing even persons qualified to be judges to sit on the bench.

UNI

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